Owner Financed Homes to Your Rescue

Owner financed homes though rare are not an impossibility. There are certain unique situations where the landlord pays your rent. These homes have gained popularity with people who can benefit from this unique situation. Owner financed homes, are a technique where the buyer borrows from the owner or the seller, in cases where the buyer cannot arrange for a loan for the full amount from the bank.Though the position is a bit tricky, it can be arranged. It has now become a viable option in the buyers’ market. In owner financed homes part of the finance minus the down payment of the buyer is carried by the seller. If the property is free from any existing loans, the seller may agree to finance the buyer. But, both the parties involved should decide on the price, the interest rates, the monthly amount and the tenure beforehand to protect their own interest; the agreement must be recorded in public records and the buyer pays on an installment basis. The interest rates are normally higher in these cases.In an owner financed homes, the landlord normally looks for a substantial amount of down payment to protect his equity and this can be around 30%. Another reason landlords stress on substantial down payment is that then buyers will not go for a foreclosure if more money is involved from their side. There are different types of owner financing options depending on the mortgage, land contracts, lease purchase agreement, and so on.Let us explore the reasons why the seller and the buyer might want to go for an owner financed home, and how it works. Most importantly, they can both go for tailor-made financing and can choose the one that suits them the best like balloon-payment, interest only, less-than-interest or even fixed rate amortization. The credit report or the credit history of the buyer becomes less important; there is the flexibility of the down payment decided by both the parties and the same in case of repaying the amount. Since the process involves less paper work, the possession is faster.The total process may be more lucrative to the seller, as he might be in a better position to dictate terms and can ask for full list price or even higher, and the interest rates are also higher. The seller will get tax breaks, as the property is an installment sale and at the same time be assured of a steady disposable income. Since owner financed homes attract a different set of buyers, you will have to be careful and it is better to consult a real estate lawyer who can give you sound advice.

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